EZY shares down (merged)

[Stockpicker]

Info for interested parties, easyJet have disappointed the market with a very weak outlook statement, talking of softening demand, shares currently down 16.5% at 244p.

8.30 BST - make that 25% ...

[Capt Chambo]

Some more from the BBC's website:-

http://news.bbc.co.uk/1/hi/business/3685233.stm

[fiftyfour]

Not surprising. All short haul airlines out of UK are making losses (especially over the winter quarter) because the market is saturated with new fast expanding carriers (like Easyjet). The market has been trashed. Ticket prices, to fill the aircraft, are quite unrealistic for long term success. With orders for hundreds of aircraft coming over the next few years, and no guarantee where the passengers will come from (other than from competitors), the overall situation for airlines won't get better.

[kevlar]

So much for scrapping the loyalty bonus in favour of a profit related bonus. BALPA CC - be very afraid.:*

[Scottie]

But if eJ make £1 profit then say are bound to pay out the loyalty bonus. Quite unrealistic in such circumstances.

[jetstream7]

Some fair comment here about easyJet, but on the face of it the figures look ok if you cut them as follows:

The pre tax loss has been reduced by £20.8 million

Passenger numbers are up by 15.9%

Average ticket price is up by 1.6%


However, not reported clearly on the BBC page...

Easter was weak

May passenger numbers are behind forecast

Seats filled was 82% last month a drop of 3%

Capacity is growing faster than passengers

The following page from the FT has a different perspective on the results...
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1083180285815&p=1012571727085

[Dogma]

I must say scrapping a +/-10% loyalty bonus, in favor of a +/-6% pay rise seemed pretty stupid.

Why did 75% of you vote for it then?

There will be rich pickings for the likes of BA and Virgin from the easy ranks.

[M.Mouse]

What seems to happen all too often in the airline industry is that someone comes along and declares they are going to change the shape and future of air travel.

This they do with varying success. Then they go bankrupt having carved the market up to such an extent that nobody makes any money and the airlines that are left are consequently that much poorer.

Competition certainly has shaken, and is still shaking, the established players but at the end of the day are we better or worse off?

Name 10 UK airlines that have been in business more than 10 years.

Now name those that have been and gone.

Massive overcapacity, ridiculously uneconomic fares = commercial suicide.

[gemini76]

You could add unrealistic pay rates to that.........also an ingredient for commercial suicide...........

[no sig]

M. Mouse

Its true that Ryanair and easyJet have indeed changed the face of European air travel, to the extent that the ridiculosuly high fares of 10 years ago and past are all but forgotten, the air traveller is without doubt, much better off than they were if that is your measure.

But even though easy are highlighting the increasingly competitive nature of the business now, they were discussing the inevitability of the current situation at least 4 years ago; they are still a highly profitable airline, along with Ryanair and are in no way at risk as you seem to suggest.

The industry needed shaken, not stirred- and it has been, and of course the financially fittest will survive.

[wheelbarrow]

I would suggest that these shares may bounce a little bit in the coming days.

Today's savagery is pretty harsh, and eJ does remain a major player.

However, 450p looks a long way off....

[timzsta]

You start of as a small player in a nice market with low overheads, offering low fares. You enjoy great success, make lots of money, and expand. You suddenly find you have expanded so much your overheads have caught up with those of your 'high fare' competitors. Subsequently you put up fares to cover your overheads as the competition lowers their fares to compete. You begin to loose market share, begin to loose money and then you go bust.

10 British Airlines that been in existence for more then 10 years:

1. British Airlines
2. Virgin Atlantic
3. British Midland
4. Monarch
5. Britannia
6. MyTravel (although formerly known as Airtours)
7. Air 2000
8. GB Airways
9. Flybe (formerly Jersey and British European)
10. Channel Express

Note - only Flybe is low cost - and they have only just gone so. Does that tell you something about low cost??????

[brabazon]

timzsta

Interesting theory and I'm sure easyJet's overheads have increased as they have expanded, but reached the level of the network carriers? Don't think so, check the CAA Airlines financial data and prove your point. Where's the evidence that they have put up fares to cover the overheads, unless you think 1.6% increase in average fare is significant.

There's going to be losers in this market, but I think easyJet will continue as Ryanair will, although perhaps with lower margins, but still on an annual basis making money. May not be what the City traders want to hear, but that's the reality of the UK/European short haul airline business in 2004.

[Hudson Bay]

It was only time. Just like Air Europe. Measured growth and Stability that resembles a worn out shopping trolly. Who ever thought that when O'leary made the statement that a low fares Airline would go down the pan by the year end that it would be in the colour of orange?

Which plonker that runs an airline could ever think that they could take on just about every Airline in Europe?

Somebody tell me how you can compete with BA with such masive reserves?

Tell me how you make money when your average seat price is £38.06? BMIbaby's is £78.34.

How can you run a service against a Dash 400 between Belfast and Glasgow when the flight time is less than 20 mins? An Airport in Belfast that nobody wants to use. Unless the ticket is free!

Why pay premium prices for slots at LGW when everybody is pulling out and moving to regional Airports.

Why John Lennon Airport? Most people want to depart from Manch.

Why get in silly expensive arguments with rival Airlines?

Expensive Aircraft! BA are rubbing their hands. All potential crew are trained and current!

Unrealistic wage packets for someone to fly between STN-EDI all day.

Was taking on one of United Kingdoms richest men really clever? I don't think so.

I don't want Easy to go tits up because it's best to have the largest low cost Airline here in the UK and not elsewhere. It's jobs for the boys. Lets just be sensible. There is room for all.

[Sagey]

Hudson,

You are over simplifying the issues here. Easyjet's shares have fallen that doesn't mean that they are set to go out of business.

The biggest factor is that Ryanair and Easyjet have fallen foul to their over successes. Large profits attracted competitors into the industry and established rivals looked at ways to alter their business models to compete. Easyjet and Ryanair are large enough to gain economies of scale at their own bases, but so are BA, BMI etc.

Just look at how many low cost airlines have been attracted into the market - BMIBaby, ThomsonFly, Jet2 etc

We have seen Duo go bust, simply because they couldn't compete with their larger rivals.

The main beneficiary over such practices has been the consumer, ridiculously cheap seats which appear to be unsustainable.

The airline industry is at a stage now where it will eventually begin to reallign itself with prices that are sustainable.

It is never financially sound in the long run for companies to compete on price, the largest with the most resources can take the hit until it has driven other competitors out of the market.

Sagey

[Hudson Bay]

sagey, I understand just because a share drops, it doesn't mean that a company is going out of buisness, look at BA three years ago.

What I am observing is a company with severe problems and fudermental flaws in its operating culture. As with everything in the world people and companies don't roll over, THEY FIGHT BACK and there are many people and Airlines that can do it millions of times better than Easyjet.

Easyjet have a product, it is a good product, they have introduced many people to travel but it has holes. The largest being the fact of stepping on peoples toes and putting two fingers up at them at the same time.

They need to change the ill-informed superior image to a company that earns respect from its rivals. Take BMI and Flybe. They have an understanding and it works. NO stepping on toes.

As for the share price...Anybody buying?

[fred peck]

Dogma;

We voted for a payrise.

Not to scrap the loyalty bonus.

Check your facts before you post nonsense. (What is a +/- 10% bonus?)

And join BALPA and get first hand knowledge.

[Ben Evans]

Hudson Bay, you are a bitter FlyMaybe/BMI pilot who has an axe to grind against easyJet who moved into the regions and screwed your underperfoming business model.

It was only time. Just like Air Europe. Measured growth and Stability that resembles a worn out shopping trolly. Who ever thought that when O'leary made the statement that a low fares
Airline would go down the pan by the year end that it would be in the colour of orange?

Nobody has gone bust and O Leary was talking about the likes of Duo, BMIBaby, Flybe, German Wings and Thompsonfly.

Which plonker that runs an airline could ever think that they could take on just about every Airline in Europe?

You think O Leary and Webster are plonkers? Bet I would prefer to have their bank balance rather than yours.


Somebody tell me how you can compete with BA with such masive reserves?

Massive reserves? Last I heard they were still BILLIONS in debt!

Tell me how you make money when your average seat price is £38.06? BMIbaby's is £78.34.

By having half the cost of BMIBaby which are still on target to break even next year. Unlike easyJets years of solid profit.

How can you run a service against a Dash 400 between Belfast and Glasgow when the flight time is less than 20 mins? An Airport in Belfast that nobody wants to use. Unless the ticket is free!

Yeah the City is a lovely toy airport that is convenient when open and not foggy and you don't mind about car park charges or flying turboprops that have appalling punctuality.

Why pay premium prices for slots at LGW when everybody is pulling out and moving to regional Airports.

Look Mr Thicky - easyJet moved into Gatwick post Sept 11th when suddenly slots were going begging. As such they secured a workable base at the UK's number 2 airport without having to buy a single slot. Contrast with Flybe who only make money by slowly selling off their family silver in the form of Heathrow slots to Quantas.

Why John Lennon Airport? Most people want to depart from Manch.

Uh - hello - LPL has been a money making base for EZY since the last century!

Why get in silly expensive arguments with rival Airlines?

Do you mean Ryanair? Ryan and EZY take great care not to compete with each other - its something like only 3 airport pairs where they do compete...

Expensive Aircraft! BA are rubbing their hands. All potential crew are trained and current!

What? The worlds ever cheapest A319's sold on a buy one get one free basis with free transistion costs and free crew training? And who is going to go to BA for the same money 15 yrs to command and working the roster nobody else wants at the bottom of the seniority list?

Unrealistic wage packets for someone to fly between STN-EDI all day.

Oooooh - get her?! Jealous are we?

Was taking on one of United Kingdoms richest men really clever? I don't think so.

Do you mean Sir Michael? Rich he may be but where the heck is BMI headed? Nothing much makes any money and the future is eaither oblivion or being asset stripped by Virgin? Premium European Shorthaul is DEAD - get it?

I don't want Easy to go tits up because it's best to have the largest low cost Airline here in the UK and not elsewhere. It's jobs for the boys. Lets just be sensible. There is room for all.

Oh no you don't. You can't tag that on the end of your postings and play the reasonableness card. You want easyJet to fail more than the sun to come up tomorrow.

Sorry - ain't going to happen.

BEN

edited for personal attacks. H

[Hudson Bay]

oooooooooooooooh BEN

Something touched your frail nervous system!!!!!!!!!!!!!!

Sounds like your caught on that rusty hook!! How about reading a comic instead of the prune? You may laugh and even wriggle free!!!

Whatever you do, only fly a kite!!

:D :D :D

[Caslance]

Why John Lennon Airport? Most people want to depart from Manch. Well, no. Liverpool's growth over recent years makes a bit of a nonsense of that.

What people in the North-West really want is choice, and they most certainly have it.

[Flightmapping]

Surely the place for all this extra capacity is mainland Europe. The UK domestic market is heavily over-saturated, and this might be good for the consumer, but is it good for the airlines, or the environment (much more pollution than there needs to be with all those excess seats flying around)?

Apart from Germany, how many other EU countries (including the new ones) have a properly developed lo-co market? France is virtually untouched - can anyone name a French lo-co airline? Maybe the unions would never have it.

EZ & FR have bases on the mainland. The others don't (apart from Thomsonfly sister company HLX). Surely that makes them much more stable in the long run?

[BahrainLad]

Let's have a look at some route pairs:

London-Edinburgh, 3rd June am, return 4th June pm.

Easyjet: £65.98 (STN)
BA: £83.70 (LCY)

Paris-Marseilles, same dates.

TGV: €110 (£60)

When you consider the distances involved, that's why there's no low-cost air in France.

[Flightmapping]

Fair point, but the TGV only covers the "spine" between Paris & Marseille. It does not reach Nice or Toulouse (on a dedicated line), two of France's largest cities. Despite the TGV to MRS, there is still a half hourly frequency to ORY, yet only EZ offer any kind of competition.

Doesn't the lack of competition have more to do with the slot situation at CDG & ORY?

[FlapsOne]

Dogma

You have quoted totally inaccurate and misleading information. If you had been accurate you might have realised why 78% voted in favour of the deal.

The current loyalty bonus is SECURE for AT LEAST 18 months.

Any profit share in the meantime is in ADDITTION to that.

The loyalty bonus will only be reploace IF agreement is reached on an acceptable formula by Oct 2005.

For other scaremongers

EZ has made a loss every winter for the last 5+ years. This year's winter loss is £6m less (better) than last year.

Don't work on estimates, wait for facts!

[Hudson Bay]

caslance

Speak to any English speaking scouser and they will tell you that they much prefer to fly from Manchester.

Why? I'll tell you.

I do not dispute that due to the arrival of Easyjet at the pool airport pax figures have risen considerably but their is a massive amount of pax that will not fly from there. The connections are non existant apart from the odd bus which takes forever and a day. By car if you are arriving from North wales/Wirral peninsula it is by far quicker to go to Manch.

Besides that the overiding factor is that Easyjet fly mainly the leisure traveler and peoples holidays begin at the airport. Generally speaking people from the North West will tell you Liverpool Airport is dull and unattractive, whilst Manchester is exciting,vibrant and atmospherically it's got what it takes.

Give a cultured Liverpudlion a choice ie Bmibaby, same destination and same price they will always opt for Manchester.

Now that MAN has simmilar landing fees to John Lennon Airport, Liverpool will struggle. You just cannot compete. I think Easyjet knew that when the Tiny airline began operations out of MAN. (They had to put a free bus service on between the two Airports) and the fact that easy kicked up a fuss when they first started out of Liverpool speaks for itself. They wanted Manch and at the time they wouldn't lower their fees.

It has worked for a while but the long term outlook looks bleak. Read Rays statement today.

Maybe he should of said above us only sky. Cuz it sounds to me that there won't be as many of his aircraft above us as most people think.

[Berenger Saunier]

a cultured Liverpudlion
Now I know you're nuts.

[Caslance]

You just cannot compete. Who, me?
Wrong city, pal.
Try the other end of the M56. :hmm:

[Dogma]

Hay don't shoot the messenger!

"Not to scrap the loyalty bonus.

Check your facts before you post nonsense. (What is a +/- 10% bonus?)

And join BALPA and get first hand knowledge."

OK loyalty BONUS!!

Me thinks you need more Balpa membership in easy. Pilots in easyJet seem to have been pissed on from the outset. Friends of mine in said company earn less now than they did 2 years ago!

Hard Fact!

[keepitlit]

BEN EVENS

RE:"Yeah the City is a lovely toy airport that is convenient when open and not foggy and you don't mind about car park charges or flying turboprops that have appalling punctuality".

IS AN A321 A TOY AIRCRAFT THEN!

WHATS THE P*NIS EXTENTSION THAT YOU CIRCUMNAVIGATE WITH.:E

RGDS K.I.L.:D

[Toilet_Town]

easyJet have gone through a massive expansion over the winter, new aircraft, new routes and training lots of crews. The summer program is in place, the new routes are flying, i've no doubt that it will be a £bumper£ of a summer for easyJet.

The next big market is Spain following that my cards are on easyAtlantic.

Now FlapsOne, back to getting our rosters sorted....


:cool:

[A4]

At the risk of being accused of being paranoid etc etc can anyone explain why this thread has been moved in less than one day. However, the similarly titled "MyTravel Shares Fall" thread is still on the main rumours board, since it started on MARCH 22nd, with the associated "front page" status each time someone posts a new reply on it?

Just curious about the "moving" policy.......

A4 :hmm:

[ALLMCC]

BEN EVANS

Since when did a "toy airport" have a £22m 3 year old terminal and a £6m recently resurfaced runway? Not to mention an 8X a day LHR link! Expensive toy indeed but worth it when you look at Belfasts' so called excuse for an "International" airport - miles from Belfast, 40 year old terminal, no rail link, no LHR link, BHX link gone, BRU link gone, the list goes on!

[Scallywag]

Well Ben Evans is certainly very assertive in his defence of easyjet to the point that he was edited. I am curious though Ben, looking at your profile.......which WIDEBODY Boeing do you command out of London for Easyjet ?:p

[OLNEY 1 BRAVO]

Needless to say, the EZY first half results get a lot of coverage in the Financial Times today. As you would expect, they have been factual in their reporting and their assesment of the position, which can be summarised as follows:

1) First half better than the previous first half

2) Given the upbeat sentiment given in February, EZY were right not too keep on saying that everything in the garden is rosy

3) However they didn't say that the world is falling down about them

4) They just said that conditions in the second half were going to be tougher than originally predicted, and that it was right that this should be flagged up to investors

5) They consider the reaction by the "City" to be a total over reaction by partially influenced by the recent profit warnings from Ryanair. Incidentally, the FT considers Ryanair's difficulties to be in a different league (i.e. worse than those of easyJet)

6) They recommend buying easyJet shares.

[orangetree]

Hey Ben..you broke the golden rule. You awoke the 'my airport's better than yours brigade' in Belfast. We'll never hear the end of it now:{

[Orion Man]

It does appear that Easy's massive expansion plans are very ambitious. History is littered with airlines that failed because they tried to expand too fast.

I do hope that the results are just a blip and nothing more. The British public has benefitted enormously from the low cost era of air travel.

[FlapsOne]

It does appear that Easy's massive expansion plans are very ambitious. History is littered with airlines that failed because they tried to expand too fast.

I've heard that every year for 5 years now!!!!!!!!!!!!!!!!

Do a search through the Pprune archives if you're bored.

[Orion Man]

Thankyou Flaps One for your kind suggestion. I'm not that bored thanks and will rely on my 32 years in the business instead.